Swiss Fintech Soars as Traditional Banks Decline
In a recently published report by SwissBanking, it was indicated that the traditional financial institutions in Switzerland are stagnating as the FinTech industry keeps growing. The latest report from the Institute for Financial Services train known as “IFZ FinTech Study 2019” was made available on the 1st of April 2019.
The study carried out by the Lucerne University of Applied Studies was conducted with the objective to show the developments that took place in the FinTech sector in 2018; and to investigate the way the banks are setting up themselves in relation to the FinTech sector.
According to the report, the FinTech industry in Switzerland displayed substantial growth in 2018. There were 356 functional companies by the year-end as the sector reportedly experienced 62 per cent growth. The industry is said to have recorded bigger venture capital transactions, though the market for cryptographic assets is due for a major correction.
Furthermore, the report indicated that the FinTech sector, when compared to the general financial industry, is developing continuously. Unlike the general financial sector that has seen a decline in the number of employees and companies, the FinTech sector’s growth showed no sign of abating. The reason being that FinTech firms implement and deploy new technologies more efficiently and faster than traditional financial services firms.
Traditional financial institutions like banks will need to evolve significantly in order to maintain the same pace of growth. As stated in IFZ FinTech Study:
“Swiss financial industry to the total income of the Swiss economy is a consequence of the steadily decreasing relevance of traditional financial institutions. Reasons for this development include new business models, that make some services provided by banks obsolete.”
Another point of note in the report is the growth of crypto-related businesses and distributed ledger technology companies, which is due to the type of regulatory environment in Switzerland.
Ueli Maurer, President of the Swiss Confederation, emphasized in late March at the CV Crypto Valley Summit, the need to establish swift and clear regulations for the blockchain industry. When talking about distributed ledger technologies (DLT) and blockchain, Maurer noted that the Swiss authorities “look constantly for ways to keep two steps ahead” in a translated report on finews.
Switzerland’s federal government (The Federal Council), deems DLT to have encouraging potentials for development in digitalization. As a result, it plans to bring further improvement to Swiss regulation, so as to grasp the opportunities it presents as well as securing the position of the country as a leader in the area of DLTs.
In the same month, the Federal Assembly (Swiss legislature) gave approval to a motion meant to direct the Federal government to adjust existing legislation for regulation on crypto. The legislation is put in place to determine the way to curb crypto-related risks, and if bodies handling cryptocurrency trading platforms needed to be linked with financial intermediaries, which will then subject them to financial market supervision.